Note 3 - Related Party Transactions

3 Months Ended

Sep. 30, 2016

Notes

Note 3 - Related Party Transactions

NOTE 3 – RELATED PARTY TRANSACTIONS

Notes Payable

Notes payable to related parties were as follows at September 30, 2016 and June 30, 2016:

	September 30, 2016		June 30, 2016
Note payable, interest at 12% per annum, secured by essentially all assets of the   Company, due July 31, 2017. The lender is Temple CB LLC (“Temple”), a limited liability company controlled by Jay Hooper, the Company’s President and majority shareholder	$	547,198	$	531,975
Note payable to Jay Hooper, due on demand, interest at 4% per annum		10,000		10,000
		557,198		541,975
Less: current portion		(557,198)		(10,000)
Notes payable, non-current portion	$	--	$	531,975

Advances

As of September 30, 2016 and June 30, 2016, $34,977 was due to the Company’s President and majority shareholder, Mr. Jay Hooper, for advances made to the Company to pay for operating expenses. The advances are non-interest bearing and are due on demand.

Lease Obligation

Through June 30, 2016, the Company, through its subsidiary, Crown Laboratory Inc., leased a warehouse in El Monte, California. The warehouse is owned by Temple CB LLC, (“Temple CB”), a single member limited liability company owned by the Company’s President and majority shareholder. In October 2016, the Company and Temple CB agreed to terminate the lease effective as of July 1, 2016. The Company ceased using the premises prior to July 1, 2016. In the future, the Company may plan to lease and sublease the warehouse but will require approximately $1 million and up to 12 months to complete remediation and a building refit prior to being able to re-lease the warehouse building to customers.

The lease was an operating lease and contained escalating rent payments and a period of free rent. The Company recognized rent expense on a straight-line basis over the entire lease period. During the three months ended September 30, 2015, the Company recorded $147,692 of rent expense. During the three months ended September 30, 2016, no rent expense was recorded relating to the lease agreement. As of September 30, 2016 and June 30, 2016, the Company owed $120,000 under this lease obligation.

As of June 30, 2016, the Company recorded a deferred lease obligation of $636,154. During the three months ended September 30, 2016, relating to the termination of the lease agreement, the Company recorded a gain on the termination of the deferred lease obligation of $636,154. As the deferred lease obligation was to a related party, the Company recorded the gain as a contribution to Additional Paid-in Capital on the September 30, 2016 Condensed Consolidated Statement of Shareholders’ Deficit.

During the three months ended September 30, 2016, the Company rented office and warehouse space from a third party company on a month-to-month basis. Rent expense for the three months was $20,786.

Due to Related Party

During the three months ended September 30, 2016, the Company used contract labor services provided by Temple CB totaling $5,000. Total payments made to Temple CB for the services during the three months ended September 30, 2016 were $10,000. As of September 30, 2016 and June 30, 2016, a total of $600 and $5,600, respectively, was owed to Temple CB. The Company did not use contract labor services provided by Temple CB during the three months ended September 30, 2015.

CROWN MARKETING AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

THREE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015

NOTE 4 – SHORT-TERM LOANS PAYABLE

During the three months ended September 30, 2016, the Company borrowed $49,250 from three individuals. The loans are interest free, are unsecured and are due on demand. All of the loans were repaid in October 2016.